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Article
Publication date: 30 November 2021

Xi Chen and Hag-Min Kim

The psychic distance often hinders the interaction between cross-border e-commerce (CBEC) and consumers. This paper aims to discuss the issues of psychic distance of…

Abstract

Purpose

The psychic distance often hinders the interaction between cross-border e-commerce (CBEC) and consumers. This paper aims to discuss the issues of psychic distance of consumers in the CBEC. In addition, it attempts to explain the factors that affect psychic distance from three dimensions of culture, economy and politics and the two different shopping behaviors caused by psychic distance.

Design/methodology/approach

This research incorporates both theoretical and empirical studies. In this study, 249 validated questionnaires were selected from 300 Chinese CBEC consumers by snowball sampling, and the relationship between variables was tested using structural equation model (SEM). This was done through online research, and it is ensured that the data obtained are first-hand information.

Findings

The paper suggests the theoretical model operationalizing CBEC psychic distance and the empirical analysis results show that all the six influencing factors have a positive impact on the psychic distance of consumers. Logistics infrastructure barriers in the economic dimension are confirmed as the major influencing factor, and the significance of the political dimension is relatively small. Based on consumers' uncertainty of various kinds of information, psychic distance subconsciously causes consumers to deviate in the cross-shopping process.

Originality/value

Currently, research on e-commerce mainly focuses on saving trade costs and improving consumer welfare, while research on the internal impact of CBEC on consumers is insufficient. Psychic distance is a new concept in the field of cultural and social research. The originality of this paper is that the concept of psychic distance has been extended from overseas invested enterprises to research with CBEC consumers as the selected object. The obstacles of CBEC have been widely studied, but few are related to the closeness of consumers, or the inner feelings of consumers are ignored. In the context of CBEC, this paper lists the actual external factors and potential threats that may affect consumers' consumption concerns of CBEC from three dimensions. The real emotions of consumers in the face of these difficulties indirectly affect the purchase satisfaction and reduce the purchase desire. Consumer psychic distance is a real phenomenon in cross-border shopping, and it is almost inevitable for these difficulties. On the premise of inevitability, high psychic distance will slow down cross-border shopping in the eyes of consumers.

Details

International Trade, Politics and Development, vol. 5 no. 2
Type: Research Article
ISSN: 2586-3932

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Article
Publication date: 24 September 2021

Chansoo Park

The purpose of this paper is to assess how the transfer of explicit and tacit knowledge is affected by the knowledge disseminative capacity of a foreign parent firm, with…

Abstract

Purpose

The purpose of this paper is to assess how the transfer of explicit and tacit knowledge is affected by the knowledge disseminative capacity of a foreign parent firm, with an emphasis on the moderating role of psychic distance, by developing and testing a theoretical model of international joint venture (IJV) learning.

Design/methodology/approach

The author tested the hypotheses with survey data collected from 199 IJVs in South Korea, estimating a structural equation model using AMOS 23.0.

Findings

The author found that the capacity of the foreign parent to disseminate knowledge to the IJV has a greater impact on explicit knowledge transfer than tacit knowledge transfer. He also found that the relationship between disseminative capacity and explicit knowledge transfer is significantly moderated by psychic distance, but the relationship between disseminative capacity and tacit knowledge transfer is not.

Originality/value

The results are critical for IJVs and parent firms seeking to improve knowledge transfer, as they establish the importance of parent firms’ disseminative capacities and the moderating role of psychic distance in the process of both tacit and explicit knowledge transfer. This research addresses the research gap regarding disseminative capacity by providing empirical evidence.

Details

Multinational Business Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1525-383X

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Book part
Publication date: 25 October 2014

Douglas Dow, Lars Håkanson and Björn Ambos

This chapter bridges the gap between two distinct approaches to the concept of psychic distance – measuring it in terms of people’s perceptions of distance or in terms of…

Abstract

Purpose

This chapter bridges the gap between two distinct approaches to the concept of psychic distance – measuring it in terms of people’s perceptions of distance or in terms of exogenous national-level differences. The two approaches are reconciled in a “refined and integrative” definition of the concept, which is tested empirically using a mediating model.

Methodology

Structural equation modeling is used on a bilateral sample of 25 countries to test whether perceptions of psychic distance mediate the relationships between national-level differences and bilateral trade and investment.

Findings

By testing for alternative direct paths, the chapter confirms that for the main forms of national-level differences, culture, socioeconomic development, language, and religion, psychic distance fully mediates their relationships with both trade flows and investment patterns. However, for geographic distance, while the relationship is fully mediated for investment, it is only partially mediated for exports. Two asymmetric “distance-bridging” factors are also found to be significant antecedents of psychic distance.

Originality and implications

This chapter is the first to empirically demonstrate the mediating relationship between exogenous national-level differences and perceptions of psychic distance, and thus, provides new insights into the debate over which measurement approach is more appropriate. Perceptions of psychic distance, even if measured by expert panels rather than the actual decision-makers, fully capture the impact of national-level differences on trade and FDI flows; however, if such measures of perceptions are not available, a simple selection of four national-level differences will still capture 80% of the same effect.

Details

Multinational Enterprises, Markets and Institutional Diversity
Type: Book
ISBN: 978-1-78441-421-4

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Article
Publication date: 29 December 2020

Arthur Egwuonwu, David Sarpong and Chima Mordi

Drawing on the resource-advantage theory, the authors examine the effect of import managers' cultural intelligence (CQ) on their foreign counterpart's psychic distance and…

Abstract

Purpose

Drawing on the resource-advantage theory, the authors examine the effect of import managers' cultural intelligence (CQ) on their foreign counterpart's psychic distance and relational performance.

Design/methodology/approach

Survey data collected from 228 Nigerian automobile import managers were analyzed using structural equation modelling (SEM) to examine the relationship among the study variables. The measure of CQ in this study comprises metacognitive and motivational CQs to examine the relations between metacognitive and motivational CQs on psychic distance and their ultimate effect on relational performance.

Findings

This study suggests that metacognitive CQ reduces the effect of psychic distance in buyer–seller exchange relationships, and in the presence of a low-level psychic distance, relational performance increases. Confirming the intervening role of CQ on performance relationship, the study highlights the role of CQ and its influence on psychic distance in facilitating (or impeding) relational exchanges in international buyer–seller transactions.

Originality/value

The authors present the concept of CQ as a human capital that has the potential to improve managerial relational performance. The authors go further to advance the potential significance and relevance of CQ in improving international buyer–seller exchanges.

Details

Journal of Intellectual Capital, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1469-1930

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Article
Publication date: 13 December 2019

Riccardo Resciniti, Michela Matarazzo and Gabriele Baima

The purpose of this paper is to focus on consumers’ reactions to cross-border acquisitions (CBA) by exploring the role of consumer perceptions of the psychic distance

Abstract

Purpose

The purpose of this paper is to focus on consumers’ reactions to cross-border acquisitions (CBA) by exploring the role of consumer perceptions of the psychic distance between the country of the acquirer and that of the target firm when the acquiring corporation has a good or poor reputation.

Design/methodology/approach

A 2×2 experimental design which manipulated psychic distance and acquirer’s corporate reputation was conducted in Italy. The study considers an Italian food target firm and compares four foreign acquiring firms with different combinations of corporate reputation (good/poor) and psychic distance to Italy (small/large).

Findings

The authors found that the degree of psychic distance between the countries of the acquiring and targeted firms was inversely related to Italian consumers’ intentions to repurchase the products of the post-acquisition target, and unrelated to the acquirer’s corporate reputation.

Originality/value

This is the first study focusing on psychic distance in the context of CBA, especially from the perspective of consumer behavior, which can help to better understand certain negative reactions toward the acquisition of a business.

Details

British Food Journal, vol. 122 no. 2
Type: Research Article
ISSN: 0007-070X

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Article
Publication date: 22 June 2012

Susan Freeman, Axèle Giroud, Paul Kalfadellis and Pervez Ghauri

The purpose of this study is to provide a theoretical driven model, explaining the interaction between psychic distance and environment on increased (subsequent) resource…

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Abstract

Purpose

The purpose of this study is to provide a theoretical driven model, explaining the interaction between psychic distance and environment on increased (subsequent) resource commitment decisions made by firms in their internationalization process. Increasingly, contrary to the Uppsala internationalization process (IP) model, firms are engaging in direct investment, rather than exporting as an initial step into overseas markets. Yet, it remains unclear how psychic distance affects firms engaged in increased resource commitment, especially in the initial phase of their international expansion when uncertainty is higher.

Design/methodology/approach

Building theory by integrating two key theories of internationalisation (IP model and eclectic paradigm), the paper explains increased resource commitment. Comparing firm types, the study also fills the research gap of recognising multinational enterprises (MNEs) as heterogeneous in their internationalization experience. Psychic distance and environment are analysed across three groups of firms (born‐global, recent and older entrants) to observe the moderating effects of firm experience and related uncertainty. A model and propositions of the relationships between psychic distance and environment, providing an increased commitment perspective, are presented.

Findings

There are mixed responses to the three groups of firms for psychic distance factors (political, geographic, social, information and commercial and economic development); and environmental factors (near‐market effects and sunk costs). Surprisingly born‐global and recent entrants are less affected by psychic distance, and more influenced by external factors, but for different reasons, in making early increased resource commitment decisions in the host market, than are older entrants.

Practical implications

Firms need to consider the strategic objectives of the parent company, psychic distance, local environment and international experience when engaging in increase resource commitment in host economies.

Originality/value

The paper provides theoretical insights and practical implications for those involved in international business and marketing.

Details

European Business Review, vol. 24 no. 4
Type: Research Article
ISSN: 0955-534X

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Article
Publication date: 6 May 2014

Lars Håkanson

The purpose of this paper is to explore the importance to international trade of impediments related to, first, geographic distance, such as freight and other costs…

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3600

Abstract

Purpose

The purpose of this paper is to explore the importance to international trade of impediments related to, first, geographic distance, such as freight and other costs related to the movement of physical goods, and second, “psychic distance”, such as the costs and difficulties of transferring and interpreting the information necessary to effect international transactions.

Design/methodology/approach

The paper highlights that psychic distance perceptions between countries are not symmetric and that both exporters’ and importers’ perceptions are important. The empirical analysis covers international trade in three categories of goods among 25 major trading nations for the period 1962-2008, employing structural equation modeling, incorporating the mutual interdependence of the distance measures.

Findings

Exporters’ perceptions are more important for trade in differentiated products than for standardized goods, which conversely are more strongly influenced by those of importers. Over time, the impact of both types of psychic distance has declined due to the dramatic improvements in communication and information technologies of recent decades. International markets have thereby become increasingly transparent, facilitating the matching of geographically proximate buyers and sellers in order to minimize transportation costs. These changes fundamentally affect the competitive landscape both for firms that seek to market their goods and services internationally and for domestic firms that face new and more intense competition from foreign rivals.

Originality/value

The paper employs simultaneously a statistical methodology novel to the field and – for the first time in the literature – asymmetric measures of psychic distances as perceived by importers and exporters, respectively. Applying the methodology to different categories of goods demonstrates long-term trends in the differential impact of geographic and psychic distances.

Details

International Marketing Review, vol. 31 no. 3
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 1 August 2000

Jody Evans, Alan Treadgold and Felix T. Mavondo

Research into firm internationalisation has identified psychic distance as a key factor in explaining variations in both expansion patterns and organisational performance…

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10974

Abstract

Research into firm internationalisation has identified psychic distance as a key factor in explaining variations in both expansion patterns and organisational performance. Despite the substantial growth in research on the internationalisation of retailing, most contributions have been highly descriptive and generally bereft of coherent theoretical frameworks. This paper postulates that the psychic distance concept may provide an appropriate theoretical framework to explain variations in the organisational performance of retailers operating in the international arena. It is recognised that psychic distance alone cannot explain variations between countries inretailers’ performance. Other factors, such as the strategic decision making process, entry strategy adopted, the nature of the retail offer and the extent of adaptation, and organisational and managerial characteristics also influence the organisational performance of international retailers.

Details

International Marketing Review, vol. 17 no. 4/5
Type: Research Article
ISSN: 0265-1335

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Book part
Publication date: 23 November 2017

Nina Magomedova, Fariza Achcaoucaou and Paloma Miravitlles

The aim of this study is to explore how springboard subsidiaries affect the psychic distance between the headquarters (HQ) of multinational companies (MNCs) and a distant…

Abstract

The aim of this study is to explore how springboard subsidiaries affect the psychic distance between the headquarters (HQ) of multinational companies (MNCs) and a distant target region. The study applies a single case study methodology to analyse a springboard subsidiary located in Spain that helps its German HQ to pursue opportunities in a psychically distant Latin American region. The findings suggest that springboard subsidiaries help MNCs to reduce the perceived psychic distance between their HQ and a target region due to (1) their intermediate psychic proximity in both directions (i.e. to the HQ and the target region) and (2) their location outside the target region, which makes them somewhat ‘impartial’ and not involved in intra-regional conflicts; the study also shows that the sum of psychic distance stimuli between HQ’s home country –springboard subsidiary’s country and springboard subsidiary’s – Latin American countries is actually smaller than the direct psychic distance between HQ’s home country and Latin American countries. No previous studies have explored the effect of springboard subsidiaries on psychic distance.

Details

Distance in International Business: Concept, Cost and Value
Type: Book
ISBN: 978-1-78743-718-0

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Article
Publication date: 15 May 2009

Arto Ojala and Pasi Tyrväinen

The purpose of this paper is to investigate the internationalization behavior of knowledge‐intensive small‐ to medium‐sized enterprises (SMEs) by using macro‐level psychic

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3389

Abstract

Purpose

The purpose of this paper is to investigate the internationalization behavior of knowledge‐intensive small‐ to medium‐sized enterprises (SMEs) by using macro‐level psychic distance indicators and managers' perceptions of psychic distance.

Design/methodology/approach

This study uses both quantitative and qualitative approaches. In the quantitative approach, the impact of psychic distance to the internationalization behavior is analyzed by using bivariate correlation analysis. The qualitative case study approach is employed to investigate managers' perceptions of psychic distance as regards market entries.

Findings

Findings of this study indicate that psychic distance has an impact on the market entry of knowledge‐intensive SMEs. However, there are other factors, such as market size, opportunity seeking behavior, and actions taken by managers, which make the effect of psychic distance less visible in macro‐level quantitative analyzes.

Research limitations/implications

This study is limited by small sample size in both quantitative and qualitative studies. However, the findings offer interesting insights for further studies related to this phenomenon.

Originality/value

This study compares macro‐level and individual‐level analyses of psychic distance and indicates reasons why psychic distance should be analyzed with the help of individual‐level perceptions of psychic distance.

Details

European Business Review, vol. 21 no. 3
Type: Research Article
ISSN: 0955-534X

Keywords

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